A proposed rule that would update Medicare payment policies and rates for inpatient stays in general acute care hospitals and long-term care hospitals (LTCH) aims to strengthen the inpatient quality reporting program by including measures for readmissions relating to hip and knee replacement procedures.

The proposal, issued Tuesday by the Centers for Medicare and Medicaid Services (CMS), would strengthen the Hospital Value-Based Purchasing Program (VBP Program) to further Medicare’s transformation to a system that rewards efficient, high-quality care. This program, which was required by the Affordable Care Act, will adjust hospital payments beginning in Fiscal Year (FY) 2013 and annually thereafter based on how well they perform or improve their performance on a set of quality measures.

Specifically, CMS proposes to:

Add the Medicare spending per beneficiary measure to the Hospital VBP Program, which would affect payments beginning in FY 2015.

Reduce payments beginning in FY 2013 (for discharges on or after October 1, 2012) to certain hospitals that have excessive readmissions for 3 selected conditions—heart attack, heart failure, and pneumonia.

Build on quality reporting initiatives by recommending measures that will be used for LTCHs for FY 2015 and FY 2016 payment determinations.

In the proposal, CMS projects that payment rates to general acute care hospitals will increase by 2.3% in FY 2013. The agency projects that total Medicare spending on inpatient hospital services will increase by about $175 million in FY 2013.

For LTCHs, CMS proposes a 2.1% update to payment rates and projects that LTCHs payments will increase by approximately $100 million in FY 2013.

CMS will accept comments on the proposed rule until June 25 and will respond to all comments in a final rule to be issued by August 1. APTA will submit comments on behalf of its membership.

A detailed summary of the proposed rule is available on APTA's Medicare Payment and Policies for Hospital Settings webpage.